The Chosen Few

June 1, 1993

As the new economic order takes shape, we hear much about “sacrifice.” Secretary of Defense Les Aspin, for example, cited an “across-the-board need for everybody to sacrifice” when asked by a Senate subcommittee about the federal pay freeze proposed by the Clinton Administration. Meanwhile, believing that federal retirees should sacrifice, too, Congress has devised a selective cap on cost-of-living adjustments (COLAs) to retirement annuities.

As the Administration and Congress have it planned, though, there’s nothing “across-the-board” about the sacrificing. The main weight of the caps and freezes would fall on members of the armed forces and military retirees. The pattern is definite, and difficult to miss.

Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee, points out that almost seventy percent of the people affected by the federal pay freeze–followed by truncated COLAs through 1997–will be members of the armed forces or civilians working for the Department of Defense. Active-duty military pay will fall 21.6 percent behind compensation in the private sector by 1998.

Congress originally considered imposing the retirement COLA cap on all federal retirees, but retreated from that position because of the political heat it generated. The revised plan applies only to those under age sixty-two. That targets the sacrifice on military retirees, who are not permitted to serve to that age. Fifty-eight percent of military retirees are under sixty-two. A limited number of civil servants and postal workers, represented by vocal unions, fall into that category.

The Congressional Budget Office wasted no sloppy sentiment in sizing up the reduction options. “If fewer people are needed in the future, military pay could be even lower than it is today and still be competitive,” CBO reported in February. “Indeed, large-scale personnel reductions create the problem of how to encourage experienced personnel to leave the military rather than how to convince them to stay.” As for the retirement program, CBO pronounced it “expensive and generous.”

People certainly are being shoved out of the military. When the drawdown is complete, at least 830,000 active-duty troops–thirty-six percent of the total–will have been forced out. Before it’s over, the force-outs may exceed forty-five percent. That’s a considerable amount of sacrificing by itself.

Even without a drawdown, military people reach their statutory service limits when they are in their forties or fifties. With the drawdown, many will leave sooner than planned. Those retiring this year absorb the fullest impact of the COLA cap because they have longest to go until age sixty-two, when they qualify for a “catch-up” adjustment. A typical master sergeant, for example, will lose $63,448 over the years, counting the effects of inflation and compounding.

Social Security recipients and most other government beneficiaries will continue to receive full COLAs. The average worker in the private sector can also look ahead to modest gains. The Congressional Budget Office estimates that the Gross Domestic Product will run about 2.5 percent ahead of inflation through 1998.

So much for the myth of “across-the-board” sacrifices. Since government pay and regular military retirement COLAs are linked to wage increases in the private sector, there would be no reason for special caps or freezes if everybody were sacrificing. Do not, however, look for those pushing the caps to dwell on that point. When pressed, they justify the action by claiming that military benefits, especially retirement, were too generous anyway.

If the US population was put on the equivalent of military pay tomorrow, there would probably be a national strike going and recall referendums under way by the end of the week. The troops do not expect their earnings to measure all the way up to private-sector income (although they do expect the gap to be a little tighter than 21.6 percent).

They understand that part of the compensation is deferred, retired pay that will be computed on part–not all–of their active-duty pay. They believe the government made a good-faith compact with them that adjustments to their compensation would be fair and equitable. In 1986, for example, an act of Congress guaranteed that federal retirement COLAs would be the same as those for Social Security annuitants.

It’s hard to interpret recent developments as anything except a breach of that promise. It would also be easy to leap to the conclusion that the nation’s leaders singled out military people and retirees as nondangerous politically and chose them to bear the brunt of the reductions. The Administration and Congress might reflect on that, in between speeches about shared sacrifice and wondering why Washington has a poor image with the military.